Textile exporters flay DEPB cut

The government on last Friday effected a steep 15 per cent cut in the Duty Entitlement Passbook (DEPB) rates for cotton textiles, from 55 per cent to 40 per cent, while increasing the rates for manmade and blended textiles products by 22.5 per cent and 15 per cent, respectively.

As cotton textiles account for about 70 per cent of total textiles and garments exports of over $12 billion, the government would marginally gain in DEPB revenues because of the rate revisions.

“‘Robbing Peter to pay Paul’ was not the best way of enunciating policy in a complex and vital sector such as textiles at such a critical juncture,” Patodia said. “The DEPB rates, which are intended to neutralise the incidence of basic customs duty on the exports of cotton textile export products, should not have been reduced, as there is no corresponding reduction in the basic customs duty for the items,” he said.

Moreover, with issues like quality, contamination, and non-availability of extra long staple cottons remaining unresolved, exporters of cotton textile products are relying on imports of cotton in a large measure, he said.

“Such a reduction in the rate of almost 60 per cent from the erstwhile rate of three months ago is inexplicable and unjustified, especially when the customs duty on raw cotton has remained unchanged,” Patodia added.